Skyrocketing sugar prices are hitting some of Africa’s poorest nations particularly hard, forcing families and restaurants to forgo use of the ingredient that is core to local diets.
(Bloomberg) — Skyrocketing sugar prices are hitting some of Africa’s poorest nations particularly hard, forcing families and restaurants to forgo use of the ingredient that is core to local diets.
Disappointing harvests from some of the world’s biggest producers have pushed wholesale prices near the highest in more than 12 years in September. While that’s adding to unrelenting inflation pressures across the globe, African nations are particularly vulnerable amid a heavy reliance on sugar imports and a shortage of US dollars.
Consumers in Rwanda, Uganda, Kenya and Tanzania are paying some of the highest prices for sugar in decades, made worse by tariffs on imports, according to data by Nairobi-based commodities research group Kulea. With energy prices also elevated and unemployment rising, the surging costs are causing headaches for families trying to feed themselves.
“The pain of higher prices isn’t being felt equally across the region — it’s falling most on poorer countries,” said Kulea’s head of research Willis Agwingi.
The staple ingredient forms an important part of local food customs, and is also used in the pastries and sweets that surround Muslim celebrations. For many African households, “sugar remains one of the most affordable sources of calories,” according to Kona Haque, head of commodities research at ED&F Man.
But surging prices are forcing consumers to spend less on soft drinks and forgo sugar that’s typically added to chai and other beverages, Agwingi said. Companies are also cutting back on purchases due to lackluster demand.
“It’s been almost three months since I bought sugar for breakfast. We now consume rice in the mornings because the price of sugar can be used to purchase other condiments,” said Fatoumata Conde, a mother in Guinea, who used to put sugar in rice porridge and coffee.
The cost of making puff puff — a popular West African snack made of fried dough — has also soared, pushing some vendors to reduce the amount of sugar added to the spongy snack. A restaurant in Cameroon has switched serving tea and coffee with honey in a bid to reduce costs.
The combined raw sugar imports of the top four importing countries — Nigeria, Algeria, Morocco and Egypt — fell by 1% for the eight months through August compared to last year, and 8% from 2021 levels, according to preliminary data by Green Pool Commodity Specialists.
Key Market for Sugar
Commodity traders normally view the continent as a major driver for sugar demand. Africa has the highest rate of population growth among major areas, and its share of middle-income households is rising. However, only five countries manage to barely produce enough sugar to meet demand, making it an attractive export destination for other producers.
The cost of sugar varies by country depending on its refining capacity and the variety of sugar it imports, leaving some more exposed to price swings than others. For instance, North African nations like Algeria and Morocco typically consume more white sugar, and have more refiners compared to the rest of the continent, allowing them to import cheaper raw sugar in bulk and refine locally.
Sub-Saharan regions mainly import bags of brown sugar and low-quality whites, which are shipped at a higher cost than bulk.
Governments across the continent have scrambled to provide support. Kenyan policy makers opened a duty-free window to import sugar to plug the shortfall and tame prices. Ivory Coast has restricted exports of sugar until the end of December to ensure domestic supplies, and Ugandan officials are also facing pressure from manufacturers to lower import duties.
The problems are being exacerbated by the twin forces of a strengthening dollar and a shortage of the currency that’s used to price most raw materials including sugar. That’s diminished the ability of some countries to increase imports, according Haque from ED&F Man.
“Most countries used their dollar reserves to buy grains and fertilizers when prices were high in the aftermath of Russia’s invasion in Ukraine,” she said. “Now, some are struggling to ramp up sugar imports and drawing down stocks — but they’ll need to replenish at some point.”
–With assistance from David Herbling, Pius Lukong and Baudelaire Mieu.
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